Rs 40,000-Crore Road Projects on Hybrid Model by March: Gadkari

New Delhi: To fast-track highway building, the government by March will award projects worth more than Rs 40,000 crore on the new hybrid model while 100 projects will be bid out next fiscal, Union Minister Nitin Gadkari has said.

Thursday's announcement comes a day after the Cabinet approved hybrid annuity model for building roads to fast-track highway projects, revive the Public-Private-Partnership (PPP) mode and attract more investments in the sector.

"We have already prepared 28 projects on hybrid model. Out of these, we will award four soon. We will award projects worth over Rs 40,000 crore by March," Road Transport and Highways Minister Gadkari said.

He added, "For the next year we are going to identify 100 projects on this hybrid model."

The hybrid annuity mode is set to revive the interest of investors in the sector who were shying away from bidding road projects due to equity crunch and other issues.

Under this model, the government will provide 40 per cent of the project cost to the developer to start work while the remaining investment has to be made by the developer.

"Under hybrid mode 40 per cent grant in aid will be given by the government to the project with 60 per cent contribution from the from the contractor of which 30 per cent will be his investment and remaining 30 per cent from the bank," Gadkari said.

He said not only the government will offer the project with at least 80 per cent land acquisition but also provide necessary regulatory clearances like environment and forest besides utility shifting will be the responsibility of the government.

"In this annuity we will collect the toll," he said.

Adopting such a model for projects not found viable on BOT (Toll) mode, shall be more effective in terms of maximizing the quantum of kilometres implemented within the available financial resources of the government. Gadkari said by adopting the model, all stakeholders in the PPP arrangement - the NHAI, lender and the developer would have an increased comfort level resulting in revival of the sector through renewed interest of private investors.

The investment in this model is recovered through annuity payments to be made by the government over a specified period commencing from the date of commissioning of the project.

This model also provides an increased comfort level for the lenders and concessionaires as traffic and inflation risks are taken by the Authority.

An important feature of the Hybrid Annuity Model for highways development is the rational approach adopted for allocation of risks between the PPP partners - the government and the private partner i.e. the developer or investor.